With headlines about redundancies in the press, most recently from Jaguar/Land Rover, the threat of unemployment is looming for thousands of people more immediately than it has for some years. Something that you may want to consider is some insurance against the worst happening to you.
Specialist unemployment insurance policies usually pay out for up to 12 months after you have been made (involuntarily) redundant. They are often coupled with accident and sickness benefits and could be particularly useful if you are concerned about whether you could cope financially if you lost your job through redundancy or ill health. What these policies aren’t is the much-derided payment protection insurance, which was usually tied to a specific credit agreement or mortgage.
Deciding how unemployment insurance could benefit you is a matter of looking at your household expenditure. In 2017 the Office of National Statistics (ONS) reported that the average amount spent by each family was £536.80 per week. This obviously varies depending on local conditions, cities like London or Bristol are more expensive than other parts of the country for instance. Geoff Penrice, a financial adviser at Bates Investment Services advises that we should “put aside the equivalent of three months’ salary to protect your family should you face redundancy.” For many of us this may simply not be possible, and that is when unemployment insurance with relatively low premiums can provide piece of mind.
With self-employment increasing unemployment insurance is available for the self-employed but usually policies state that, in order to be covered, a self-employed person must provide proof that they have involuntarily ceased trading and declared this to HM Revenue & Customs. They must be registered as unemployed and actively seeking employment.
The sort of policy that is most suitable for you depends on your personal circumstances for example, whether you have any other relevant insurance or how much protection is offered by your employer in the form of redundancy payments. “You may work for a company that offers a great redundancy package, but it’s still worth considering the worst-case scenario,” advises Emma Walker comparison website moneysupermarket.com. “Look at how much you need and how long you could last before receiving the first of your payments, as policies are generally cheaper the longer you agree to wait before claiming.”
As with any other type of insurance it pays to look at your personal circumstance and review your cover regularly to ensure that it meets your current needs. Get in touch with Spot On Mortgages to discuss how we may be able to help you.
“Unemployment Insurance is optional. There are other providers of Unemployment Insurance and other products designed to protect you against loss of income”